nep-sbm New Economics Papers
on Small Business Management
Issue of 2017‒01‒01
nineteen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Public subsidies for SME research and development: Empirical evaluation of collaborative versus individual place-based programs By Andrea Bellucci; Luca Pennacchio; Alberto Zazzaro
  2. Knowledge Creates Markets: The Influence of Entrepreneurial Support and Patent Rights on Academic Entrepreneurship By Dirk Czarnitzk; Thorsten Doherr; Paula Schliessler; Katrin Hussinger; Andrew Toole
  3. Recruiting for Small Business Growth: Micro-level Evidence By Gidehag, Anton; Lodefalk, Magnus
  4. What drives export performance of firms in Eastern and Western Poland? By Pawel Gajewski; Grzegorz Tchorek
  5. Innovation, Creative Destruction and Structural Change: Firm-level Evidence from European Countries By Bernhard Dachs; Martin Hud; Christian Köhler; Bettina Peters
  6. The growth and human capital structure of new firms over the business cycle By Brixy, Udo; Murmann, Martin
  7. Firm structure and the location decision of German manufacturing firms: Evidence from official firm-level data By Krenz, Astrid
  8. Developments in new entrepreneurial activity in Finland By Kotiranta, Annu; Pajarinen, Mika; Rouvinen, Petri
  9. How do Entrepreneurial Bosses influence their Employees' Future Entrepreneurship Choices? By Vera Rocha; Mirjam van Praag
  10. The effect of personal financing disruptions on entrepreneurship By Hanspal, Tobin
  11. Universities and collaborative innovation in EC-funded research projects: An analysis based on Innovation Radar data By Annarosa Pesole; Daniel Nepelski
  12. Do Immigrants Spur Offshoring? Firm-Level Evidence By Hatzigeorgiou, Andreas; Karpaty, Patrik; Kneller, Richard; Lodefalk, Magnus
  13. Do Immigrants Spur Offshoring? Firm-Level Evidence By Hatzigeorgiou, Andreas; Karpaty, Patrik; Kneller, Richard; Lodefalk, Magnus
  14. Import, Export and Multinationality. Evidence from Swedish Firms By Davide Castellani; Claudio Fassio; ;
  15. What drives firm profitability? A comparison of the US and EU food processing industry By Adelina Gschwandtner; Stefan Hirsch
  16. Evidence on the Within-Industry Agglomeration of R&D, Production, and Administrative Occupations By Goldman, Benjamin; Klier, Thomas H.; Walstrum, Thomas
  17. Synergies for Innovation: Lessons Learnt from the S2E National Events By Andrea Conte; Nida Kamil Ozbolat
  18. Access to Credit and Unconventional Monetary policy in the Eurozone after the Financial Crisis By Petr Korab
  19. In Search for the Not-Invented-Here Syndrome: The Role of Knowledge Sources and Firm Success By Katrin Hussinger; Annelies Wastyn

  1. By: Andrea Bellucci (Institute for Applied Economic Research (IAW), Germany, MoFiR, Italy); Luca Pennacchio (Dipartimento di Scienze Economiche e Statistiche - Universita' degli Studi di Napoli - "Federico II"); Alberto Zazzaro (Universita' Politecnica delle Marche, Dipartimento di Scienze Economiche e Sociali, MoFiR - Ancona, Italy, CSEF, Naples, Italy)
    Abstract: This paper provides novel empirical evidence on the effectiveness of regional research and innovation policies for small and medium-sized firms (SMEs). Two subsidy programs implemented at the regional level in central Italy are investigated. One program targeted firms' individual research, while the other addressed collaborative research between firms and universities. Using a matched difference-in-differences approach our empirical analysis shows a differentiated impact of the two programs. The first was successful in stimulating additional private R&D investment and, at least partially, in improving firms. performance. The second program had weaker effects, mostly restricted to R&D expenditure and employment. Otherwise, subsidized firms show a reduction in their tangible and intangible investments, thus casting doubts on the benefits of subsidies forcing R&D collaborations.
    Keywords: Research and innovation; place-based regional subsidies; impact evaluation, small- and mediumsized firms, collaborative research programs.
    JEL: G32 H81 L52 O38 R58
    Date: 2016–12
  2. By: Dirk Czarnitzk (KU Leuven, Belgium); Thorsten Doherr (Centre for European Economic Research (ZEW), Mannheim); Paula Schliessler (Centre for European Economic Research (ZEW), Mannheim); Katrin Hussinger (CREA, Université du Luxembourg); Andrew Toole (US Patent and Trademark Office, Alexandria, USA)
    Abstract: We use an exogenous change in German Federal law to examine how entrepreneurial support and the ownership of patent rights influence academic entrepreneurship. In 2002, the German Federal Government enacted a major reform called Knowledge Creates Markets that set up new infrastructure to facilitate university-industry technology transfer and shifted the ownership of patent rights from university researchers to their universities. Based on a novel researcher-level panel database that includes a control group not affected by the policy change, we find no evidence that the new infrastructure resulted in an increase in start-up companies by university researchers. The shift in patent rights may have strengthened the relationship between patents on university-discovered inventions and university start-ups; however, it substantially decreased the volume of patents with the largest decrease taking place in faculty-firm patenting relationships.
    Keywords: Intellectual property, patents, technology transfer, policy evaluation
    JEL: O34 O38
    Date: 2016
  3. By: Gidehag, Anton (Örebro University and HUI Research); Lodefalk, Magnus (The Ratio Institute)
    Abstract: We examine the link between new employees in leading positions and subsequent productivity in small- and medium-sized (SME) enterprises. Managers and professionals are likely to possess important tacit knowledge. They are also in a position to influence the employing firm. Exploiting rich and comprehensive panel data for Sweden in the 2001-2010 period and employing semi-parametric and quasi-experimental estimation techniques, we find that newly recruited leading personnel have a positive and statistically significant impact on the productivity of the hiring SME. Interestingly, our results suggest that professionals with experience from international firms and enterprise groups contribute the most to total factor productivity. Overall, the findings suggest the importance of mobility of leading personnel for productivity-enhancing knowledge spillovers to SMEs.
    Keywords: recruitment; knowledge spillovers; firm growth; productivity; SME
    JEL: D22 D24 D83 J24 J62
    Date: 2016–12–15
  4. By: Pawel Gajewski (Institute of Economic Sciences, Polish Academy of Sciences); Grzegorz Tchorek (Faculty of Management, University of Warsaw)
    Abstract: We use a unique firm-level survey dataset that draws from the EFIGE (European Firms In Global Economy) questionnaire, to unveil differences in factors driving export performance in structurally most diverse areas of Poland. While conventional results about the role of size, foreign ownership and innovation activity are confirmed at the aggregate level, the picture breaks down when Western and Eastern macroregions are extracted. Our results suggest that the common perception of a more developed West (Poland “A”) and a backward East (Poland “B”) might be outdated. Rather, firms in both regions seem to follow distinct strategies and have dissimilar success factors for competing internationally. Interestingly, export performance in the East is found to benefit from family ties in business, but also product innovation and non-price competitiveness. In the West, it is in turn associated mostly with size and foreign ownership. Overall, our results on the one hand add support to the ‘New’ new trade theory and ‘New’ new economic geography’s premises related to the importance of microeconomic factors and, on the other, shed a new light on the pattern of regional development in Poland. We also discuss some implications for policy makers and managers and suggest directions of further research.
    Keywords: trade, region, firm, competitiveness
    JEL: F14 R12
    Date: 2017–01
  5. By: Bernhard Dachs (Austrian Institute of Technology, Vienna); Martin Hud (ZEW Centre for European Economic Research, Mannheim); Christian Köhler (ZEW Centre for European Economic Research, Mannheim); Bettina Peters (ZEW, Mannheim, and CREA, University of Luxembourg)
    Abstract: The shift of employment from lower to higher productive firms is an important driver for structural change and industry dynamics. We investigate this reallocation in terms of employment gains and losses from innovation. New employment created by product innovation may be offset by employment losses in related products, known as ‘cannibalisation’ or ‘business stealing’ effects in the literature, by employment losses from process and organisational innovation and by general productivity increases. The paper investigates this effect empirically with a large dataset from the European Community Innovation Survey (CIS). We find that employment gains and losses increase with technology intensity of the sector. High-technology manufacturing shows the strongest employment gains and losses from innovation, followed by knowledge-intensive services, low- technology manufacturing and less knowledge-intensive services. The net contribution of innovation to employment growth is mostly positive, an exception being manufacturing industries in recession periods.
    Keywords: Innovation, employment, reallocation, technology intensity, compensation effect, displacement effect, cannibalisation effect.
    JEL: O33 J23 C26 D2
    Date: 2016
  6. By: Brixy, Udo (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Murmann, Martin (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "Recent research suggests that employment in young firms is more negatively impacted during economic downturns than employment in incumbent firms. This questions the effectiveness of policies that promote entrepreneurship to fight crises. We complement prior research that is mostly based on aggregate data by analyzing cyclical effects at the firm level. Using new linked employer-employee data on German start-ups we show that under constant human capital of the firms' founders, employment growth in less than 11/2-yearold start-ups reacts countercyclically and employment growth in older start-ups reacts procyclically. The young start-ups realize their countercyclical growth by hiring qualified labor market entrants who might be unable to find employment in incumbent firms during crises. This mechanism is highly important in economic and management terms and has not been revealed by prior research." (Author's abstract, IAB-Doku) ((en))
    JEL: E32 J23 L26 M13 L25 L11 D22
    Date: 2016–12–19
  7. By: Krenz, Astrid
    Abstract: This paper uses a comprehensive, official firm-level dataset for German manufacturing firms to investigate the location decision of new firm activity in the German regional economy, differentiated by firm structure. The rich regional dimension of this dataset is investigated for the first time in regard to the location choices of firms. Results reveal that agglomeration economies play a significant role for small firms, but not for medium-sized and large firms. Whereas the market potential exerts a significant positive impact for all firms, labor costs do not exert a significant impact on large firms' location decisions.
    Keywords: Firm location,Regional economy,Agglomeration economies
    JEL: R11 R12
    Date: 2016
  8. By: Kotiranta, Annu; Pajarinen, Mika; Rouvinen, Petri
    Abstract: About half of all new business activity in Finland can be categorized as being entrepreneurial. The number of this kind of new businesses has not increased dramatically during the last ten years. However, the characteristics of these businesses have changed. Nowadays, new entrepreneurs have higher education background, they have more likely work experience from a relevant field, they are more innovation-oriented, and they have higher initial growth aspirations. Their businesses are more likely to seek sales growth by utilizing international markets and by focusing more on consumer markets and less on business-to-business markets. On the other hand, maybe due to prolonged recession in the Finnish economy, the higher share of new entrepreneurial businesses is being started because there are no better opportunities to get a job. Heavy regulation and tight legislation are being seen as the most significant disincentives at the start-up phase. Growth-oriented new entrepreneurial firms see financial issues and labor market rigidities as significant restrictions for growth.
    Keywords: Entrepreneurship, growth firm, start-ups, growth-orientation, enterprise policy
    JEL: D92 L26 L53 M13
    Date: 2016–12–22
  9. By: Vera Rocha (Copenhagen Business School, Denmark); Mirjam van Praag (Copenhagen Business School, Faculty of Economics and Business, University of Amsterdam and Tinbergen Institute, The Netherlands)
    Abstract: We adopt a process-based approach to investigate the influence of entrepreneurial bosses on the two main decisions of employees towards becoming entrepreneurs: exit from the current firm and entry into entrepreneurship. In other words, we study the push and pull mechanisms possibly underlying the influence of entrepreneurial bosses. We do so by employing an identification strategy based on comparisons of same-gender matches of bosses and employees, using rich register data for Denmark. We show that same-gender entrepreneurial bosses have a great impact on employees’ future entrepreneurship choices, especially among women. We do not find any evidence that female bosses push female employees out of the workplace, by creating a discriminatory environment that forces them to search for alternative career paths. Instead, our analysis finds consistent support for pull mechanisms, with role modeling being the main explanation for the positive influence of female entrepreneurial bosses on female employees’ transition into entrepreneurship. We show that the female boss effect is greater than other social interactions identified in prior research. We conclude that entrepreneurial bosses can be role models and female entrepreneurial bosses may thus act as a lever to reducing gender gaps in entrepreneurship rates.
    Keywords: Entrepreneurship; role models; gender gaps; female leadership
    JEL: J19 J24 L26 M12 M13
    Date: 2016–12–16
  10. By: Hanspal, Tobin
    Abstract: I show that disruptions to personal sources of financing, aside from commercial lending supply shocks, impair the survival and growth of small businesses. Entrepreneurs holding deposit accounts at retail banking institutions that defaulted following the financial crisis reduce personal borrowing and are consequently more likely to exit their firm. Exposure to the corresponding investment losses from delisted publicly traded bank stocks strongly reduces the rate of firm survival, particularly for early-stage ventures. At the intensive margin, owners who remain in business reduce employees after personal wealth losses. My results suggest that personal finance is an important component of firm financing.
    Keywords: Entrepreneurship,Small business,Personal finance,Financial crisis,Bank defaults
    JEL: L26 D14 G01 G11 G21 G33
    Date: 2016
  11. By: Annarosa Pesole (European Commission - JRC); Daniel Nepelski (European Commission - JRC)
    Abstract: The European Commission's Framework Programme (FP) contributes an important share of R&D expenditure in Europe. For example, the Horizon 2020 is the biggest EU Research and Innovation programme ever launched which makes nearly €80 billion available over 7 years (2014 to 2020). In addition to financing science and technology development, one of the main objectives of the FP is to foster international collaboration among research organizations and private firms, both large and small. Collaboration is a key conduit for innovation-related knowledge flows for both firms that use R&D and those that are not R&D-active. The main idea behind the Framework Programme is that innovation often results from the interaction and cooperative efforts of different organisation devoted to the achievement of a common goal. This study builds on the first IR report: it extends the number of reviewed projects, and it looks at the relationship between the type of innovators and the potential of their innovations. A particular emphasis is put on collaboration between universities and private organizations. Furthermore, the report analyses whether universities and private organizations have different needs and face different bottlenecks to bring their innovations to the market.
    Keywords: Innovation Radar, Collaboration, Industry, University, SMEs, EC-funded
    Date: 2016–12
  12. By: Hatzigeorgiou, Andreas (Ratio); Karpaty, Patrik (Örebro University School of Business); Kneller, Richard (University of Nottingham); Lodefalk, Magnus (Örebro University School of Business)
    Abstract: Offshoring is an important aspect of firms’ internationalization. However, offshoring comes at a cost, especially where information or trust is lacking. Immigrant employees could reduce such offshoring costs through their knowledge of their former home countries and via access to foreign networks. We develop a framework of heterogeneous final-good firms to guide our empirical analysis and draw on new employer-employee data for approximately 12,000 Swedish firms during the time period 1998-2007. Our results support the hypothesis that immigrant employees spur offshoring activities by firms through lower offshoring costs. Hiring one additional foreign-born worker can increase offshoring up to three percent on average, with skilled migrants having the strongest effects.
    Keywords: offshoring; migration; networks; trust; information; trade barriers
    JEL: D21 D83 F14 F22 F23
    Date: 2016–12–22
  13. By: Hatzigeorgiou, Andreas (The Ratio Institute); Karpaty, Patrik (Örebro University); Kneller, Richard (GEP, University of Nottingham); Lodefalk, Magnus (The Ratio Institute and Örebro University)
    Abstract: Offshoring is an important aspect of firms’ internationalization. However, offshoring comes at a cost, especially where information or trust is lacking. Immigrant employees could reduce such offshoring costs through their knowledge of their former home countries and via access to foreign networks. We develop a framework of heterogeneous final-good firms to guide our empirical analysis and draw on new employer-employee data for approximately 12,000 Swedish firms during the time period 1998-2007. Our results support the hypothesis that immigrant employees spur offshoring activities by firms through lower offshoring costs. Hiring one additional foreign-born worker can increase offshoring up to three percent on average, with skilled migrants having the strongest effects.
    Keywords: Offshoring; migration; networks; trust; information; trade barriers
    JEL: D21 D83 F14 F22 F23
    Date: 2016–12–21
  14. By: Davide Castellani (Henley Business School, University of Reading); Claudio Fassio (CIRCLE, Lund University, Sweden and BRICK, Collegio Carlo Alberto, Torino, Italy); ;
    Abstract: This paper studies the role of imported inputs in explaining firms’ export behaviour. Unlike most of the existing literature we are also able to control for the participation of domestic firms to multinational networks. This allows us to test to what extent the recurrent evidence that importing foster exporting activity is instead a figment of the fact that importers are also part of multinational groups. Our evidence, based on Swedish manufacturing firms, suggests that imported inputs, rather than multinationality, are a key determinant of firms’ export propensity and product scope. This result is particularly strong for SMEs, and it is driven by imported intermediates and (to a lesser extent) capital goods.
    Keywords: importing, exporting, multinational enterprises, Sweden
    JEL: F14 F23 O52
    Date: 2016–11
  15. By: Adelina Gschwandtner; Stefan Hirsch
    Abstract: This article analyzes persistence and the drivers of profitability in US and EU food processing using GMM estimations. Due to different firm size structures first comparable samples of US and EU food processors are derived using Propensity Score Matching. The GMM results indicate that profit persistence in food processing is lower than in other manufacturing sectors. Firm-specific drivers of profitability are size, growth and financial risk. Regarding industry characteristics the growth rate significantly influences profitability. The findings provide insights for the management of food processing firms as well as for policy decisions aiming to counter power imbalances in the food sector.
    Keywords: Firm profit; persistence; food industry; GMM panel estimation; propensity score matching
    JEL: L12 L66 M21
    Date: 2016–12
  16. By: Goldman, Benjamin (Standford Institute for Economic Policy Research); Klier, Thomas H. (Federal Reserve Bank of Chicago); Walstrum, Thomas (Federal Reserve Bank of Chicago)
    Abstract: To date, most empirical studies of industrial agglomeration rely on data where observations are assigned an industry code based on classification systems such as NAICS in North America and NACE in Europe. This study combines industry data with occupation data to show that there are important differences in the spatial patterns of occupation groups within the widely used industry definitions. We focus on workers in manufacturing industries, whose occupations almost always fit into three groups: production, administrative, or R&D. We then employ two approaches to document the spatial distributions of each group within an industry. First, we calculate the distribution of employment shares across local labor markets and second, we calculate a version of the Duranton and Overman (2005) agglomeration index. Both approaches reveal appreciable differences in the spatial distribution of occupation groups within most manufacturing industries. These differences have important implications for our understanding of the sources of industrial agglomeration, the spatial agglomeration of innovation, the effectiveness of local economic development initiatives, and the spatial properties of particular industries.
    Keywords: Agglomeration; automobiles; manufacturing industries; labor markets; occupations
    JEL: J24 L6 L62 O10 R12
    Date: 2016–11–14
  17. By: Andrea Conte (European Commission – JRC); Nida Kamil Ozbolat (European Commission – JRC)
    Abstract: In this issue - Smart Specialisation Strategies (S3) play a key role in fostering an efficient and inclusive Research and Innovation (R&I) ecosystem by creating the right framework for focused investments based on selected high value added priorities and a shared vision of territorial development. - Building synergies can contribute to two complementary objectives: helping to close the innovation divide across European territories and increasing the efficiency and effectiveness of public policy intervention. - Synergies between ESIF and other funding programmes (e.g. COSME, Horizon 2020) could maximise the specific value added of S3 investments such as the capacity to support effectively research capacity building and the exploitation of research results for raising the overall social/economic impact of European R&I. - Quality of R&I "governance" (e.g. long-term planning, monitoring and evaluation, stakeholders' involvement) appears as the key factor for achieving a successful implementation of R&I investments under the current S3.
    Keywords: Stairway to Excellence, Smart Specialisation, ESIF, Horizon 2020, European Funds, Synergies, Policy Events, R&I, Governance, Innovation
    Date: 2016–12
  18. By: Petr Korab (Department of Finance, Faculty of Business and Economics, Mendel University in Brno)
    Abstract: This paper investigates the availability of bank credit to enterprises in the Eurozone after the recent financial crisis. The analysis draws from a rich firm-level dataset on perceived credit availability of micro, small and medium-sized, and large enterprises in 11 countries in the Euro Area during the time horizon 2010 – 2014. Employing probit and logit estimators, the empirical results suggest that GDP growth is a significant factor improving availability to small and medium-sized and large firms in the post-crisis period. On the contrary, the asset-purchase programmes of the European Central Bank did not show a significant impact on credit availability to micro and small and medium-sized enterprises. The findings support the decision of the ECB to further intensify asset purchasing and officially introduce the program of quantitative easing in 2015.
    Keywords: credit availability, credit rationing, credit constraints, credit supply, financial crisis recovery
    JEL: E51 E52
    Date: 2016–12
  19. By: Katrin Hussinger (CREA, Université du Luxembourg); Annelies Wastyn (IDEA Consult, Brussels, Belgium)
    Abstract: The not-invented-here (NIH) syndrome refers to a negative attitude of employees against externally developed knowledge. We show that the sources of external knowledge and the success of the company that acquires knowledge externally are factors that impact the occurrence of an NIH syndrome. In line with social identity theory, we hypothesize that internal resistance is most likely to occur if knowledge is acquired from similar organizations. This hypothesis is supported by our empirical finding that internal resistance against external knowledge is more likely to occur when knowledge is acquired from competitors rather than from suppliers, customers or universities. Further, we show that the NIH syndrome is more likely to arise within successful companies that acquire knowledge from competitors. This is in line with our hypothesis that firm success increases the extent to which employees identify themselves with their company resulting in stronger in-group favoritism and a superior tendency to reject externally generated knowledge.
    Keywords: not-invented-here syndrome; external knowledge sources; firm success; social identity theory; organizational identity
    JEL: O31 O32 O33
    Date: 2016

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